West Muskingum Local Schools district supporters celebrate after the district's levy passed during the spring primary election. / Chris Crook/CentralOhio.com

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CentralOhio.com

For six consecutive times, West Muskingum Local Schools had gone to the voters seeking additional financial support only to be rejected.

So in 2012, the district created an advisory group of residents to tout a tax levy, created a survey to gauge public support and pledged to do a positive campaign for an emergency property tax levy. The measure failed by hundreds of votes.

Voters this spring showed up in far smaller numbers. However, they approved the exact same request by the opposite margin as the 2012 failure.

The struggles of the district are just one example of the politics and idiosyncrasies of an Ohio tax system that relies heavily on public referendums. Despite the time-consuming nature of the system and the fact it does not always provide the desired end results, most experts say it would be highly unlikely for voters to give up their direct say in property taxes.

“It’s unlikely you’re going to see a great deal of change,” said Michael McTeague, acting interim associate dean of Ohio University-Eastern in St. Clairsville. “Local ballot issues are becoming more of the vogue.”

In Ohio, schools generally must go to the ballot to seek increases in property tax revenue or to implement an income tax. Comparatively, cities can implement a 1 percent income tax without a referendum and counties can implement a 1.5 percent sales tax with just a vote by the commissioners. The state legislature can raise and lower taxes on its own, as well.

Kent Scarrett, lobbyist for the Ohio Municipal League, said giving cities the ability to levy their own income tax is a great model because it relieves some of the competition for property tax dollars. He noted that, generally, 70 percent of municipal revenue comes from income taxes.

Ohio’s referendum reliance is unique when compared with its neighbors. Indiana allows local governments to increase property tax revenue up to state caps, West Virginia allows schools and communities to increase their tax revenue through property value growth and Pennsylvania allows its elected boards and councils to set tax policy up to state limits.

Having direct voter approval provides critical accountability for elected officials, said Greg Lawson, who is with the conservative Buckeye Institute.

“It gives people who have skin in the game a way to have a voice,” he said.

But the process can be grueling, said West Muskingum Superintendent William Harbron, who mentioned all the time, energy and stress involved in a campaign.

“That’s where superintendents, I think, spend investing all their time,” he said.

Best results?

Reliance on public votes doesn’t necessarily mean Ohio residents enjoy the most favorable tax system. Residents spend about 10.8 percent of their income on state and local taxes, about the same as all of their neighbors. Pennsylvanians, with almost no referendum tax issues, spend 10.6 percent and West Virginia residents spend 11.3 percent, according to a report from the Ohio Department of Taxation.

How ballot issues are worded and sold to residents also is important, said Scott Drenkard, economist for the Tax Foundation. Plus, he said there are plenty of examples, especially in California, where residents vote to raise taxes all the time, even retroactively.

“Direct democracy is not always the ally of sound tax policy,” he said. “It depends on who shows up.”

Harbron noted the importance of the participating electorate. A consultancy firm he used to help with his campaign this spring told him that if the firm can push the issue in an election where fewer than 3,500 voters show up, his campaign would win. About 3,100 people voted on the issue.

In fact, the campaign focused not on the money the district would raise from the levy, but on more ephemeral concepts associated with schools, Harbron said. There were four key points: the need is real, community pride, the need to educate students on a high level and protection of property values. He said the timing of the governor’s budget announcement also helped.

“The reality sunk in that the state is not going to provide West Muskingum with any additional funding,” he said.

Timing, location matter

However, that isn’t to say that smaller elections are a boon to tax issues. In fact, special elections — which generally have by far the fewest number of voters — are mostly fatal to local tax issues.

An analysis of school tax issues from 2005 to 2012, accounting for two in each election cycle, showed only 35 percent of the requests were approved in February or August elections. By contrast, 55.7 percent of issues were approved in November general elections and 57.8 percent were approved in primary elections.

Districts generally shy away from using special elections because they yield such poor results, said Damon Asbury, director of legislative services for the Ohio School Boards Association. He noted that campaigns simply don’t know who’s going to vote in such an election.

Lawson said although success in special elections isn’t high, there are concerns about putting issues on the ballot too many times in a year, essentially wearing down voters. Asbury said typically it takes a few times for a school issue to be on the ballot before it is approved.

“While it’s good to have voter control, there is such a thing as voter fatigue,” Lawson said.

Where votes are cast also matters. Officials in traditionally rural southeastern Ohio counties argue it is more difficult to get issues approved. Voters in the counties of the Coalition of Rural and Appalachian Schools supported school issues at a 47.8 percent rate. In the rest of the state, school issues were supported 56 percent of the time.

Lori Snyder-Lowe, coalition president, said the failure rate in her area of the state is direct evidence that people in the area don’t have enough income to pay more taxes. She noted that even if local boards were given the power to increase taxes on their own, she doubted that would happen frequently in Appalachian Ohio.

“They would find it difficult to put an unvoted tax on the shoulder of our citizens,” she said.

Harbron said because people don’t vote on every tax they pay, if they see other tax increases, they will have more reasons to oppose the taxes they do have a say about. Lawson, however, doubts that reasoning, saying local districts should be able to make their case to residents for funding.

Although elections sometimes can spur system gaming, Lawson noted such actions would happen in a more removed way for local official elections if they had the power to levy taxes.

“Certain ballot campaigns are not always as straightforward and honest as they could be,” he said. “Just because it’s not a perfect system does not mean it’s not as good as it can get.”

LOCAL TAX BURDEN

State and local taxes in Ohio account for roughly the same percentage of residents’ income as its neighbors despite Ohio requiring voters to approve many local taxes.

State

State and local taxes as percent of income

National rank

Ohio

10.8 percent

18

Indiana

10.9 percent

16

Kentucky

10 percent

31

Michigan

10.9 percent

17

Pennsylvania

10.6 percent

20

West Virginia

11.3 percent

13

Source: Ohio Department of Taxation

TAX APPROVAL

Ohio and its neighboring states have different methods of allowing local governments and schools to approve tax increases. Ohio schools must rely almost exclusively on ballot measures.

State

Property tax

Income tax

Sales tax

Ohio

Increases, renewals or replacements must go to the voters for approval. Property value increases largely do not result in property tax increases without voter action.

City councils can approve a 1 percent tax without voter approval, but larger taxes must go to referendum. Schools can institute a tax with voter approval.

County commissioners can approve a local sales tax of up to 1.5 percent for county government needs.

Indiana

Property tax revenue can be increased annually based on a state growth formula with council/school board approval. Schools are allowed to ask for additional property taxes through referendum. Bills not subject to a referendum increase are capped by the state constitution.

Income taxes are approved on a countywide basis through a collective weighted vote of the county’s legislative bodies. Revenue is split among the different governments based on size but does not go to schools.

Indiana does not allow local sales taxes.

Kentucky

Property taxes can be raised up to 4 percent annually without a referendum by cities, school boards and counties. Larger increases require a public vote.

Cities and counties can impose an occupational license fee of up to 2 percent of gross wages.

Kentucky does not allow local sales taxes.

Michigan

Property tax increases can be approved by referendum up to state limits. Taxable property value growth is capped annually, but that cap is readjusted when a property is sold.

Cities can approve a 1 percent tax on residents and a ½ percent tax on nonresidents with approval from voters, although some cities may ask for larger taxes.

Michigan does not allow local sales taxes.

Pennsylvania

Property taxes are set by a vote of the elected body based on state limits.

Income taxes are set by vote of the elected body based on state limits.

Pennsylvania generally does not allow local sales taxes, but there are some exceptions.

West Virginia

Voter approval is required for levy increases or new taxes, but property taxes are allowed to increase based on property value without referendum.

West Virginia does not allow local income taxes.

West Virginia has permitted 20 municipalities to implement up to a 1 percent sales tax with a vote from a local council. If implemented, the community must drop business and occupation tax.

REFERENDUMS BY TIME/PLACE

The location and timing of a referendum can play a large role in whether it is successful. Here is a look at school ballot issues from 2005 to 2012.